How to Flip Land in Hawaii?

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How to Flip Land in Hawaii?

Bart Waldon

With median residential property values across Hawaii hovering around $600,000 as of late 2022 according to portal Hawaii Life, the islands clearly offer one of the hottest yet costliest real estate markets in America. Yet for investors attuned to savvy land flipping tactics, opportunities persist to acquire, improve and sell vacant land parcels for sizable profits - even in popular coastal destinations statewide.

Evaluating Hawaii's Local Land Markets Dynamically

As a remote chain of islands where free flow of building lots and vacant acreage remains restricted across a limited land base to begin with, trading raw land requires ground-level familiarity with hyper-local market conditions impacting values on each island.

Kauai's North Shore commands vastly higher land valuations than Kapaa or Lihue, just as land in Kona, Kamuela or Waikoloa on Hawaii Island fetch higher asking prices than Pahoa, Volcano or Ocean View tracts. Land values shift block by block. Sourcing promising flip opportunities means understanding these micro-markets.

Regularly review recorded transactions in candidate submarkets to analyze average selling rates per acre/square foot over the trailing 3, 6 and 12-months based on criteria like view attributes, utility access, zoning allowances, feasibility to build/subdivide and other differentiators that sway property desirability. Understand where current true market rates stand before pursuing land purchases.

Seeking Discounted Entry Points on Hawaii Lands

Unlike fix-and-flip rehabs involving existing homes where structural repairs/upgrades alone enhance value, flipping raw lands in Hawaii's limited markets relies first on buying at sufficient discounts to current area comparables to allow adequate margins after improving and reselling sites at market rates.

Pursue family lands tied up in estates, agricultural parcels with idle potential for development flipping once zoning changes, abandoned holdings, uncleared sites that only require Palehua mitigation permitting or other non-conforming lands where regulatory delays, legal complications or lack of property upkeep impede deals and allow bargain buying opportunities.

For lands already zoned appropriate to construct multi-family buildings, hotels, commercial buildings or other structures in high buyer demand, target leasehold lands rather than fee simple ownerships to secure superior entry discounts upfront on the lease rights. Always focus first on bargain buying, then strategic enhancements to lift marketability.

Strategically Improving Lands to Boost Resale Potential

Once acquiring lands well below established market valuations through sources like estates, troubled assets or leasehold positions, investors must determine key site enhancements that open possibilities for buyers.

Example upgrades include:

  • Clearing/Grading Land Parcels – Using equipment to level sites and ready building pads
  • Driveway, Utility or Other Infrastructure Building – Construct water, electric, road access
  • Boundary Staking – Survey crews clearly delineate site boundaries
  • Land Use Entitlement Changes – Rezoning lands for higher-value allowable uses
  • Environmental Mitigation Credits – Obtaining Palehua credits opening land uses

Target improvements that unlock the next higher valuation level in buyers’ eyes such as enabling multi-family densification on lands where only single-family previously feasible based on current zoning permissions. Or adding roadway and utility infrastructure enabling quick builds.

Finding Buyers Seeking Improved Lands

The payoff for successful land flippers in Hawaii comes from pairing strategic land improvements with marketing campaigns reaching buyers specifically seeking enhanced site opportunities in the same fiercely competitive island locales.

Marketing Tactics – Targeted Ways to Reach Qualified Buyers:

  • Local MLS Listings Promoted to Developers
  • Direct Mailings to Regional Builder, Developers, Investors
  • Targeted Social Media Outreach Across LinkedIn, Facebook, Instagram
  • Landing Specialty Property Listings on Sites Top Developers Track
  • Bespoke Auctions When Multiple Interested Buyers Vie

Waiving standard residential listing commissions using flat-fee agreements with land specialists ensures marketing funds go further. Vet buyers vigilantly to confirm adequate resources to build and steady intent to utilize enhanced infrastructure. With preparation and hustle, modest raw land flips still earn major returns in tough Hawaii locations.

Key Benefits of Flipping Land in Hawaii

Wider Inventory of Deal Flows

Unlike the limited supply pipeline of existing homes, raw lands allow more deals to be sourced through channels like leaseholds, permitted agriculture lands and partially entitled sites. Patience pays off.

Lower Buy-In Costs

With residential real estate overheated, vacant lots and acreage inherently sell for lower square foot and per-acre prices at entry, even in Hawaii.

Value Lift Potential Through Strategic Improvements

Select infrastructure improvements unlock outsized valuation gains compared to minor home flipping remodels given land’s base value.

Higher ROI Potential Over Lengthy Ownership Periods

Land held 5-10+ years time horizon can amplify returns exponentially compared to quick home flips once lands get entitled and improved.

For adventurous investors, Hawaii land flips offer lower buy-in costs plus higher ROI potential over years-long holds than attempting quick fix-and-flip home projects in the same supply-constrained island markets.

Final Thoughts

Flipping land in popular Hawaii destinations persists as a worthwhile endeavor for the enterprising real estate investor, albeit requiring intimate familiarity with hyper-local lot values and site dynamics plus ingenuity securing properties sufficiently below market rates to allow for improvement costs and still earn profits. Remain prepared for lengthy entitlement delays but approach land enhancement strategically.

Frequently Asked Questions (FAQs)

What legal right must I have before improving and selling land?

Quiet title free of any encumbrances paired by deeds covenants or boundary disputes. Ownership gets confirmed before investing via title search, attorneys and possible court petition if needed.

What project costs might I incur flipping lands? 

Typical costs can involve purchase price, site clearing/preparation, grading, basic driveway/road installation, running utilities, securing entitlements/permitting, surveying, project management and marketing for resale.

What are the risks of raw land investment in Hawaii? 

Challenges include stringent zoning restrictions, environmental mitigation delays, high deal costs, sometimes looking carry periods extending for years before projects get completed and offer enough margin for profit.

How can I estimate costs to improve vacant lands? 

Source local contractor quotes by type of equipment work required, review material costs and explore consultant/professional fees if rezoning or permitting lands. Pad ~20%.

What questions should I ask before buying vacant land in Hawaii?

Vet zoning codes/density, title contingencies, roadway access, utility proximity, environmental restrictions, mitigation requirements, flood zone status, transaction history, leasing vs fee simple status, HOA stipulations and more before acquiring.

Proper due diligence matched to intimate knowledge of Hawaii’s highly localized land dynamics paves the way for lucrative vacant land flips. Target at least 250-300% profit margins and complexes with sufficient net discounts upfront to allow for improvement costs and carrying expenses. Remain flexible on purchase pricing but don’t overpay just to gain beach beach ground.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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